Challenging the status quo. Annual Report 2017

Transcription

1 Challenging the status quo

2 Vision To be an effective and responsive securities regulator fostering a culture of integrity and compliance and instilling investor confidence in the capital markets. Mandate To provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. Values Professional Protecting the public interest is our purpose and our passion We value dialogue with the marketplace We are professional, fair-minded and act without bias People To get respect, we give it Diversity and inclusion bring out our best Teamwork makes us strong Ethical We are trustworthy and act with integrity We strive to do the right thing We take accountability for what we say and do Contents 2 Chair s message 4 Executive Director s letter 6 Performance highlights 21 Governance 28 Advisory Committees 34 Management s Discussion and Analysis 54 Financial Statements 60 Notes to the Financial Statements

3 at a glance in Ontario-based listed issuers account for of Canada s equity market value 50 % Inquiries & Contact Centre Assisted 3,728 investors Responded to 12,360 market participant inquiries 67,300 Registered individuals in Ontario 1,280 registered firms in Ontario 38 fintech companies received support from LaunchPad Ontario is principal regulator to over 80 % of all Canadian investment funds Enforcement 48 administrative sanctions 4 wrongdoers sentenced to a total of 8.5 years in jail 3 no-contest settlements, $143 million returned to investors 96 % of all Canadian OTC derivatives trading includes an Ontario participant 1 2,026 participants attended in the Community events 712 public company, investment fund and structured product prospectuses reviewed 1 Proportion of OTC derivative transactions by outstanding notional, reported to the, compared to the aggregate Canadian outstanding notional reported by DTCC, CME and ICE as of March 31,. Commodity trades are excluded from both amounts. 1

4 Chair s message 2 I am honoured to lead this organization as we focus on our mandate to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. It is my pleasure to welcome you to the Ontario Securities Commission s () annual report, which outlines the tremendous progress against our goals that the hardworking men and women of the have achieved in this past year. I am honoured to lead this organization as we focus on our mandate to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. The global markets remain challenging and are in the midst of a dramatic disruption, where demographic, social, cultural and technological forces are changing the way people think about investing and raising capital. These shifts are not only challenging those we regulate, but are also challenging the to keep pace. This year, we took important steps on a range of key initiatives toward our mandate. Putting investors first We remain focused on delivering new rules that will transform the standard of financial advice and determining whether advisory fees should remain embedded in products. The is committed to introducing changes to the standard of advice in the client-advisor relationship by implementing a series of targeted reforms along with our colleagues in the Canadian Securities Administrators (CSA). In addition, the and New Brunswick s Financial and Consumer Services Commission (FCNB) are in the process of outlining an overarching best interest standard as a guiding principle governing this relationship. We believe that the current standard of suitability is too low and that investors deserve a higher standard of conduct from their advisors, one that requires the investor s interests to come first. While millions of Canadians invest in mutual funds for their retirement, our research shows that investors generally do not understand the true costs of these investments. The majority of mutual funds contain embedded fees paid to advisors that are not generally transparent to investors and create incentives that could encourage advisors to recommend funds that pay the highest trailer fees. We believe investors should know what they re paying for their investments, including the cost of the advice they receive. Our motivation for both the best interest and embedded fee initiatives is simple: do the right thing for investors and maintain confidence in our markets even if it means challenging long-standing business models. We recognize the significance of the kinds of changes we

5 are pursuing, which is why we have taken considerable time to seek input from all our stakeholders throughout this process. By working together, we can arrive at solutions that will benefit investors and the marketplace. Enforcement remains a key focus of the as all market participants must be confident that those who break the rules will be investigated, prosecuted and sanctioned. To uphold that confidence, the is targeting more complex cases and serious violations of securities law, and it is critical that we have the tools to support this effort. This year, we launched our Office of the Whistleblower, which offers a financial award for providing evidence of serious misconduct. We re offering compensation of up to $5 million to whistleblowers who come forward with information about significant violations of Ontario securities law, such as insider trading, market manipulation, and serious accounting and disclosure violations. Our no-contest settlement program is helping us resolve enforcement cases more efficiently, and this year, we approved three no-contest settlements, resulting in approximately $143 million being returned to investors. To date, the has entered into eight no-contest settlements and has seen $342 million returned to investors as a result. Modernizing regulation All of this disruptive change has also made us focus on modernizing how we work to accommodate the emergence of new financial technology or fintech. Innovations in the use of technology to offer services such as peer-to-peer lending and automated advising services (or robo-advisors ), as well as emerging technologies such as blockchain, artificial intelligence and machine learning are altering how the capital markets function and are changing how firms serve their clients. Yet these innovative business models and technologies often do not fit neatly under the existing regulatory framework. That s why we introduced our new fintech team, LaunchPad, where we actively support these new businesses to navigate the regulatory framework and identify areas of our regulation that need modernization. Increasing transparency The also continues to push for greater transparency in corporate governance disclosure. Later this year we will publish the results of our third review since disclosure requirements for women on boards and in executive officer positions came into effect in Our previous reviews have shown some progress and encouraging trends; however, most boardrooms and executive suites are still a long way from equal representation. This has to change. Shareholders are becoming more vocal about the need for greater diversity, and we as regulators may have to do more. Better reporting on environmental issues, particularly on the risks associated with climate change, is another area where investors are demanding more from public companies. Shareholders with a longterm view of their investments are seeking more meaningful disclosure on the business and financial risks associated with climate change. Investors are not only concerned about what companies do, but also about how they do it and how they disclose it. The CSA is conducting a review of the state of climate change disclosure to help inform whether enhancements are needed to current disclosure requirements. While we are aware that additional disclosure is a burden for public companies, we support transparency and engagement between boards and investors on key issues. The CSA review will help the discussion on this issue. Engagement with our stakeholders is a critical component of our work, and I would like to thank the members of our 13 advisory committees for the valuable insights they provide to the. This year, we welcomed two new committees the Fintech Advisory Committee and the Seniors Expert Advisory Committee and we look forward to their contributions in these areas. I would like to thank the members of the Commission, Lead Director AnneMarie Ryan, Vice-Chairs Monica Kowal and Grant Vingoe, and Executive Director Leslie Byberg for their strong leadership, wisdom and commitment to securities regulation in Ontario. I would also like to express my appreciation and thanks to our talented and dedicated staff who work every day to do the right thing for Ontario s investors and capital markets. Maureen Jensen Chair and Chief Executive Officer Ontario Securities Commission 3

6 Executive Director s letter process. This year, we launched our first multiyear research project, which will measure the impacts of Client-Relationship Model Phase 2 (CRM2) and mutual fund point of sale (POS) rules from both an investor and industry perspective. We also continued to examine the impacts of changes relating to women on boards by analyzing the data, and we will consider if more needs to be done. 4 Every day, the strives to deliver its mandate of investor protection and fostering fair and efficient capital markets and confidence in capital markets. While this can involve significant public policy discussions or introducing new tools and approaches, it also means delivering on our core regulatory work as we oversee markets, carry out enforcement, register firms and individuals, review disclosures and conduct compliance reviews. We also do this through a strong corporate culture that is fiscally responsible, transparent and accountable, and by continually improving how we work and striving to support and develop our talented staff. I reflect with pride on the dedication and hard work of our staff this past year. They adapted to leadership changes within the, as well as rapidly evolving and complex market developments. They tackled significant new priorities and embraced changes in the methods and approaches used to deliver our regulatory mandate, including: Enhancing the use of data and technology Across the organization, we drove forward with our efforts to harness the power of data to help us make decisions with a view to the best possible regulations and outcomes. Capturing, managing and analyzing data effectively are important components of doing evidencebased work. Data has enhanced our programs at the in many areas, including exempt market oversight, risk-based compliance reviews of registrants and derivatives trade reporting oversight. Assessing the impact of our regulatory approaches We aim to make informed decisions that lead to strong regulatory outcomes. Ongoing assessment of the impacts of our regulations is an important part of this Collaboration, consultation and outreach To achieve the best results, regulators must work collaboratively and must consult with stakeholders. This year, the collaborated with other securities regulators domestically and internationally on many issues critical to the well-being of our markets in Canada. We also sought the views of a wide range of stakeholders by holding roundtable consultations, hosting RegHackTO, engaging with advisory committees, and conducting numerous investor and market participant outreach initiatives. We listened and talked to stakeholders to understand their points of view, taking these into account as we pursued our key regulatory priorities. All of this activity is part of a larger effort: to foster a market in Ontario where investors can achieve their investment objectives and businesses of all sizes are better able to compete, innovate and flourish. At the same time, we are focusing on reducing regulatory burden as long as investor protections are in place. In the coming year, we will be re-examining our rule framework to identify opportunities to reduce the regulatory costs of raising capital in the public markets and to streamline disclosure and reporting requirements for investment funds. None of this work would be possible without the unwavering commitment of our staff who strive every day to make a difference for Ontario s investors, businesses and capital markets. I would also like to commend staff for their significant contribution toward establishing a new cooperative regulatory system that would transform securities regulation in Canada. Finally, I must express my appreciation to our Chair Maureen Jensen for her vision and leadership. We look forward to continuing to serve the people of Ontario and delivering on our mandate with passion and pride. Leslie Byberg Executive Director and Chief Administrative Officer Ontario Securities Commission

7 Executive Management Team Jean-Paul Bureaud Director, Office of Domestic and International Affairs Leslie Byberg Executive Director and Chief Administrative Officer Kevin Fine Director, Derivatives Tyler Fleming Director, Investor Office Debra Foubert Director, Compliance and Registrant Regulation H.R. Goss Director, Corporate Services Susan Greenglass Director, Market Regulation Naizam Kanji Director, Office of Mergers and Acquisitions Jeff Kehoe Director, Enforcement Grace Knakowski Secretary to the Commission Elle Koor Director, Strategy and Research Huston Loke Director, Corporate Finance Cameron McInnis Chief Accountant John Mountain Director, Investment Funds and Structured Products Carolyn Shaw-Rimmington Director, Communications and Public Affairs James Sinclair General Counsel Lisa Wilkins Chief Human Resources Officer 5

8 Performance highlights This section highlights the s key accomplishments toward its goals for the fiscal year. Each year, the publishes a Statement of Priorities, which sets out the s strategic goals, priorities and specific initiatives for the year. You can find the Statement of Priorities on the s website at OUR goals 1 Deliver strong investor protection 2 Deliver responsive regulation 3 Deliver effective compliance, supervision and enforcement 4 Promote financial stability through effective oversight 5 Be an innovative, accountable and efficient organization 6

9 1 Deliver strong investor protection Priority What we did Why it s important Putting the interests of investors first Best interest standard In April 2016, the Canadian Securities Administrators (CSA) published Proposals to Enhance the Obligations of Advisers, Dealers, and Representatives toward their Clients, a consultation paper that included support by the for a guiding principle of best interest. In May, the confirmed it would continue consulting on a regulatory best interest standard while the majority of CSA members announced they will not pursue further discussion on the topic. staff intend to make their recommendations to the Commission in, potentially pushing forward with a rule proposal. Targeted reforms to the client-registrant relationship The April 2016 consultation paper also included proposals for targeted amendments to National Instrument (NI) Registration Requirements, Exemptions and Ongoing Registrant Obligations. The amendments relate to registration requirements, including know-yourclient and know-your-product requirements, suitability, conflicts of interest, the use of business titles by advisors, and proficiency. As of May, all CSA members are supporting some of the targeted reforms. The CSA is reviewing feedback on the consultation paper with a goal of publishing proposed amendments to NI by March 31, We are of the view that the current Canadian regulatory framework needs to better align the interests of registrants with the interests of their clients. We believe that a regulatory best interest standard is needed as a guiding principle governing the client-registrant relationship. In addition, clients will be better served if the nature of the clientregistrant relationship is further clarified through targeted reforms. These are core elements that exist in the advisory relationship. Clarifying and strengthening these elements, in conjunction with a guiding principle of best interest, are key to improving investor protections. Assessing advisor compensation practices In December 2016, the CSA published its Review of Practices Firms Use to Compensate and Provide Incentives to their Representatives, a survey of 27 compensation methods used by registrants in various categories. By using an evidence-based method to explore how advisors are paid, we can identify practices that reduce conflicts of interest and respond to practices that do not meet regulatory requirements. Addressing compensation arrangements in mutual funds Alternatives to embedded fees In January, CSA members published Consultation on the Option of Discontinuing Embedded Commissions. This paper raised the option of transitioning advisor compensation to an arrangement where investors pay their advisors directly. The paper provides in-depth research that outlines the potential impacts of banning embedded fees. The CSA provided a 150-day comment period on the paper and will be holding roundtables in fall as part of its consultation. This consultation paper follows two CSA-commissioned research reports that provide compelling evidence that embedded fees incent advisors to recommend funds that benefit the advisor over the investor. We encourage feedback from all stakeholders. If the decision to discontinue embedded fees is made, we want to craft a rule that addresses the inherent conflict, best aligns the interests of investors, advisors and fund managers, and reduces the risk of unintended consequences. 7

10 1 Deliver strong investor protection Priority What we did Why it s important Empowering investors through better disclosure ETF Facts In December 2016, the CSA published final amendments that require exchange-traded funds (ETFs) to produce and file a summary disclosure document called ETF Facts, beginning September 1,. ETF Facts provides investors with a plain-language summary of the fund and includes a description of the potential benefits, risks and costs of investing in an ETF, as well as information about how these products are traded and priced. ETFs are a fast-growing segment of the retail investment fund market, and we believe investors in ETFs should receive a similar level of disclosure, and ability to comparison shop, as mutual fund investors. A summary document called Fund Facts has been provided to mutual fund investors since Standardized CSA mutual fund risk classification methodology In December 2016, CSA members published final amendments to NI Investment Funds and related consequential amendments, ushering in a new standardized risk classification methodology for use in both Fund Facts and ETF Facts. The amendments will take effect on September 1,. Standardizing the methodology used to rate the level of investment risk will improve transparency and consistency of information investors receive. It will also allow Canadians to more readily compare the investment risk levels of different mutual funds and ETFs. Increased oversight of the exempt market Supporting investors in the exempt market In May 2016, the sent the Risk Assessment Questionnaire to Ontario registrants, which asked them to provide comprehensive information about their business operations. We used this information to identify and rank firms with higher-risk practices. These firms were prioritized for a compliance review by staff. The findings and analysis of the s ongoing compliance reviews will be included in the Summary for Dealers, Advisers and Investment Fund Managers. By closely monitoring the market and using a risk-based approach, we can focus our resources to potentially stop or prevent harm to investors. This data will also help inform future decisions about the exempt market. Over the past few years, several new prospectus exemptions have come into effect in Ontario, with the aim of increasing access to capital for small issuers. While this has paved the way for more investment opportunities, aspects of the exempt market also pose specific risks for investors. Improving education, engagement and alignment with investors interests Using research to better understand retail investors In March, we released Staff Notice Behavioural Insights: Key Concepts, Applications and Regulatory Considerations. This research report examines key behavioural concepts that have been applied in other jurisdictions and identifies methods that could be incorporated into our work to achieve better outcomes for investors and market participants. Over the coming year, the will conduct pilot projects that will apply and test this research on work related to policies and operational processes. Behavioural insights provide a deeper understanding into why and how people make decisions, and can identify ways to communicate that could influence investors to take positive steps and make better decisions. Whether the activities are related to market or registrant regulation, or investor education and outreach, applying a behavioural lens to the s work increases the likelihood of achieving better outcomes. 8

11 Making CRM2 work for investors IN ACTION Starting in January, investors began receiving two new reports from their investment firms: investment performance, and charges and other compensation. These reports are a result of an initiative called Client Relationship Model Phase 2 (CRM2), which is a set of amendments to NI Registration Requirements, Exemptions and Ongoing Registrant Obligations. Under CRM2, investment firms now provide investors with greater clarity and disclosure on the costs and performance of their investments, and the content of their accounts. To assist investors in navigating the new reports, our Investor Office launched Investmenting.ca. This site includes an explanation of market value, the difference between time-weighted and money-weighted rates of return, and the impact of fees. Investmenting.ca is just one of many online resources from the that have been developed to help people make informed decisions about their money. The Investor Office s educational resources, including its flagship site, GetSmarterAboutMoney.ca, received over five million visits this year. Priority What we did Why it s important Seniors strategy The Investor Office is currently developing a seniors strategy that will guide activities to address the issues affecting older investors in a more comprehensive way, including policy, outreach, training and education. This year, the Investor Office began work that will help inform the development of the strategy: The Seniors Expert Advisory Committee (SEAC) was created to advise on securities-related issues. Its members represent a variety of disciplines including law, academia, industry, medicine, enforcement and seniors advocates. In September 2016, we released Retirement Readiness: Canadians 50+. Among the findings, the report revealed that nearly half of pre-retirees do not have a retirement plan. We delivered 46 in the Community presentations on fraud prevention and working with an advisor, directly to investors across Ontario, many of them seniors. We believe it s in the interests of the public we serve to better understand and address the unique needs of older investors. We are cognizant that seniors need to manage their finances during retirement and that they are frequently the targets of financial abuse or fraud. Enhancing outreach to vulnerable investors In September 2016, the Investor Office launched a multilingual investor education site, InvestingIntroduction.ca. The site provides investment basics in the 22 languages most frequently spoken in Canadian homes. Along with anti-fraud tips, the site includes information about Registered Retirement Savings Plans (RRSPs), Tax Free Savings Accounts (TFSAs) and Registered Education Savings Plans (RESPs). The Investor Office also expanded its anti-fraud themed teletownhalls during the year. These events follow a call-in radio show format, with staff providing information, answering questions and conducting live polls over the course of one hour. Approximately 2,500 people participated for a meaningful amount of time in five teletownhalls this year. New Canadians, some of whom do not speak Canada s official languages, can be targeted by fraudsters through their communities. By providing people with trustworthy and unbiased information in their native tongue, we hope to raise awareness of fraud and improve financial literacy. Teletownhalls allow us to reach a large number of investors and share important anti-fraud information. The interactive format provides valuable insights into investor knowledge and current concerns. Improving risk profiling Together with the s Investor Advisory Panel (IAP), the Investor Office organized a risk profiling roundtable on the issues raised in Current Practices for Risk Profiling in Canada and Review of Global Best Practices, a research report commissioned by the IAP. The roundtable participants discussed the need for improved regulatory guidance and consistency in risk profiling methodologies and definitions, and possible next steps to enhance the risk profiling used in the retail investment advice process. Risk profiling and suitability are issues that go hand-in-hand. When an advisor can properly assess an investor s tolerance for risk, the advisor s ability to recommend products that best suit their clients needs is improved. Enhanced risk profiling is in the interests of all market participants. 9

12 2 Deliver responsive regulation Priority What we did Why it s important Monitor and assess the impact of recent regulatory reforms in Ontario ing on gender diversity disclosure In September 2016, CSA members published their second review of the disclosure requirements for women on boards and in executive officer positions. Of the 677 Toronto Stock Exchange (TSX)-listed companies reviewed: 55% had at least one woman on their board, up from 49% the previous year, 59% had at least one woman in an executive officer position, which is consistent with the previous year, and 21% had adopted a formal written policy for improving the representation of women, an increase from 19% the previous year. The disclosure requirements came into effect in December 2014 and apply to TSX-listed companies. We have committed to reviewing the findings after three years and will determine if additional regulatory action is appropriate. Best practices in corporate governance include proactive policies for ensuring gender diversity for the board. The comply-or-explain disclosure requirements challenge companies to have thoughtful discussions about gender diversity. These discussions are intended to improve transparency and assist investors when making investment and voting decisions. Measuring the impact of CRM2 and POS In August 2016, the CSA announced a multi-year research project to measure the impact of CRM2 and the POS amendments. CRM2 requires investment firms to provide clients with clear and concise account statements that tell them what they earned and what the advisor was paid. The POS amendments require mutual fund dealers to deliver a plain language Fund Facts document to investors before they buy a mutual fund. Between 2016 and 2020, the CSA will measure outcomes related to investor knowledge, attitude and behaviour, as well as registrant practices, fees and product offerings. A final report is expected to be published in CRM2 and POS are expected to deliver improved and timely investment information to investors so they can make better informed decisions. For some investors, this is the first time they are receiving account information communicated in this manner. These initiatives represent significant changes for investors and the industry. Monitoring and analyzing investor, registrant and industry outcomes are crucial to understanding the impact and effectiveness of the amendments. Monitor and support market structure evolution Order Protection Rule In July 2016, final amendments to the Order Protection Rule and its Companion Policy came into force. The amendments include: guidance related to intentional order processing delays or speed bumps, and a methodology for setting market data fees. The amendments also included a 2.5% market share threshold for protected markets, which came into effect in October The Order Protection Rule was created to prevent inferior-priced orders from trading through or executing before visible and better-priced limit orders. The amendments respond to market developments and new marketplace business models, and ultimately aim to improve fairness, efficiency and confidence in the market. 10 Lower trading cap on fees In April, amendments to NI Trading Rules and Companion Policy CP Trading Rules came into effect. These amendments lower the cap on active trading fees for equity securities that are listed only in Canada. The cap was reduced to $ a share from $ a share for securities trading at or above $1.00 a share. These amendments address concerns regarding inefficiencies and costs in the market.

13 Modernizing regulation to support fintech innovation IN ACTION Fintech (or financial technology) is a rapidly growing field that includes online advisors, peer-to-peer lending platforms and digital crowdfunding. While fintech presents many opportunities, some challenges have also emerged, including investor protection issues and new business models not fitting in the traditional regulatory framework. LaunchPad directly tackles these issues. Since its introduction in October 2016, LaunchPad has helped dozens of fintech businesses navigate securities requirements by engaging with the fintech community and offering support through a guidance program. We ve learned from the fintech community as well. In November 2016, we hosted RegHackTO, the first hackathon by a Canadian securities regulator. By posing real-world problem statements to fintech teams, we were able to see how innovators approach investment services and products with regulation in mind. The intends to apply these learnings to similar businesses going forward. We also recognize that governments and regulators must work together to support new business models. The is part of a CSA regulatory sandbox, a national initiative that provides regulatory relief for certain businesses to test their services. Internationally, we signed MoUs that enable businesses licensed in Canada to seek regulatory approvals in Australia and the United Kingdom. Priority What we did Why it s important Improve alignment with international standard setting Cyber resilience recommendations In June 2016, the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IO) published guidance on cyber resilience for financial market infrastructures. In September 2016, the CSA referred to these guidelines in a Staff Notice encouraging Canadian market participants to strengthen measures to counter cyber threats. Markets around the world face the threat of cyber attacks. By aligning practices in our markets with global standards in cyber security, we can better mitigate the risks and better protect our markets. Climate change-related disclosure In December 2016, the Financial Stability Board (FSB) published disclosure recommendations set out by its Task Force on climate-related financial disclosures. In March, this was followed by the CSA announcement of a climate change disclosure review project that would gather information on the current state of climate change disclosure in Canada and internationally. Investors are increasingly concerned about business risks and financial impacts associated with climate change. This has resulted in a demand for greater disclosure on this matter so that investors can make informed investment decisions. Participating internationally The continues to actively participate in and lead activities on an international level. In 2016, the entered into five Memorandums of Understanding (MoUs) with other international regulatory bodies. The is a member of IO, an organization that is recognized as the global standard-setter in securities regulation. In addition to having members on approximately 30 international committees, task forces and working groups, last year staff chaired the following IO committees and board-level groups: Committee on Emerging Risks Committee on Regulation of Secondary Markets IO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) Monitoring Group Steering Committee Board group on Data Protection More than ever, our markets are interconnected and global. Regulators share many issues, and cooperation enhances our responsiveness. The gains timely insights and understanding of emerging regulatory issues by engaging with other regulators. This allows us to develop informed, proactive regulatory solutions and shape international standards that are aligned with the needs of our capital markets. It also enables us to ensure that Canadian regulations align with best standards internationally. IO Task Force on Market Conduct In June, the Task Force published a report examining regulatory approaches and tools used to address market conduct related to trading in the wholesale markets. The report identifies tools such as enhanced surveillance and analysis methods, whistleblower programs, tailored enforcement and remedial sanctions, and improved self-assessment and accountability measures. Regulators and markets across the globe benefit when proven procedures and mechanisms that address market conduct risk are shared and adopted. This report aligns with a number of international work streams and complements the efforts of the FSB. 11

14 3 supervision Deliver effective compliance, and enforcement Priority What we did Why it s important Enhance compliance through effective inspections, supervision and oversight Improving compliance reviews and reporting We continue to enhance our information gathering, analysis and compliance reporting through the following: In May 2016, we sent an updated Risk Assessment Questionnaire to all portfolio managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. We do this every two years to identify firms with higher-risk practices and prioritize them for compliance reviews. As of June 2016, issuers and underwriters who rely on certain exemptions to distribute securities are required to complete, file and make public a new, harmonized of Exempt Distribution. We are currently coordinating our compliance efforts with selfregulatory organizations (SROs) to look at areas including sales incentives and conflicts of interest. The CSA, Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) all published notices regarding compensation practices on December 15, The findings and analysis of the s ongoing compliance reviews are published in our Summary for Dealers, Advisers and Investment Fund Managers and our Corporate Finance Branch. We gather information about business operations, practices and procedures in a number of ways to better understand activities in the market and spot trends that could warrant regulatory attention. For example, risk ranking allows us to more quickly identify and prioritize the review of activities and firms that could either harm investors or, if a compliance breach in their systems occurred, could have a significant impact on the market. Conducting compliance reviews in partnership with industry SROs improves the consistency and effectiveness of our supervisory activity. We use a series of tools to address compliance issues, which range from outreach and guidance to corrective action. Actively pursue enforcement action against fraud and other serious securities law violations Whistleblower Program The launched the Office of the Whistleblower in July 2016 to target serious securities misconduct. The Whistleblower Program is the first of its kind in Canada. The program provides a financial award of up to $5 million to individuals who voluntarily come forward with information that leads to enforcement action resulting in monetary sanctions of over $1 million. Since its launch, the Office of the Whistleblower has received several credible tips and high-quality information. The Whistleblower Program is designed to strengthen the s investor protection mandate and provide an avenue for credible tips and information to come forth that may otherwise have been difficult to detect. It also serves as a credible deterrent against securities law violations in Ontario. This new initiative provides organizations the opportunity to review their internal compliance systems and to determine whether a culture of compliance one where potential whistleblowers are encouraged to report misconduct internally is being fostered. If these internal compliance systems fail, the program provides an effective mechanism for reporting securities misconduct. 12

15 Priority What we did Why it s important JSOT prosecutions and guilty pleas The Joint Serious Offences Team (JSOT) is a partnership between the, the Royal Canadian Mounted Police (RCMP) and the Ontario Provincial Police (OPP) that was established in 2013 to investigate and prosecute financial crimes. In 2016, an investigation by JSOT led to fraud, illegal distribution and unregistered trading convictions in the Londoni Gold Corp. case. The company s two principals were ordered to pay $6.6 million in restitution and were each sentenced to four years in jail, the longest jail sentences in history for a breach of the Securities Act (Ontario). JSOT and the Ministry of the Attorney General of Ontario were also able to secure guilty pleas from individuals who were involved in privacy breaches at the Rouge Valley Hospital System and Scarborough Hospital, where they used confidential information of new parents to generate RESP sales leads. When regulators and law enforcement agencies work together and share their information, expertise and abilities, we improve investor protection and our chances of catching and shutting down white-collar criminals. This helps to instill confidence in our markets. The penalties imposed through criminal and quasi-criminal prosecution, which can include fines and jail sentences, send a strong deterrence message to those who might harm the public. Enhancing cross-border enforcement In March, IO approved an Enhanced MMoU, which will expand IO members powers to investigate wrongdoing across international borders. Work is underway to screen signatories to the new MMoU, a process where applicants capacity for cooperation is examined by a group of experts. The MMoU allows members to work with their counterpart regulators in other countries to share information related to audits, boost their ability to freeze assets, and gather phone records and Internet search records needed in a securities investigation. Members can also compel people in other countries to attend hearings and provide testimony. This work is supported by the IO MMoU Monitoring Group Steering Committee, which is chaired by the s Chair and CEO, Maureen Jensen. As technology continues to evolve, securities and financial crime have grown more complex and borderless. Strong, collaborative relationships with global regulators provide greater ability to prevent, detect and prosecute crime that can harm markets and investors at home and abroad. Fraud Prevention Month In March, the launched an anti-fraud campaign that focused on educating investors on the three Rs of fraud: recognize, reject and report. The campaign reached thousands of retail investors across Ontario through three Twitter live chats, two teletownhalls and four in the Community presentations. Investors are more likely to avoid becoming victims of fraud if they can recognize the warning signs of a scam. By engaging in various outreach methods, we can share fraud prevention information with a wide range of Canadians. 13

16 3 supervision Deliver effective compliance, and enforcement Enforcement activity Enforcement Branch: Intake This year, we took a new approach to case assessment. A formal case is now opened for every new report of activity that may engage the Enforcement Branch. This more accurately records the Enforcement Branch s intake, assessment and referral activity. Fiscal year Number of cases assessed Number transferred for investigation Starting in , Case Assessment opened files on all matters received by the team, including files referred to other jurisdictions and files resolved at the intake stage. Enforcement Branch: Investigations We are also taking a more deliberate approach in choosing to move forward with those cases that send a strong regulatory message. During the year, the Enforcement Branch reviewed existing matters, and as a result, completed 46 investigations, of which 31 were closed and 15 were transferred to litigation. Fiscal year Number of completed investigations Number transferred for litigation Enforcement Branch: Litigation This year, fewer proceedings were commenced before the Commission due to a number of complex cases that had not yet reached the litigation phase. In addition, a number of serious allegations were being prosecuted in the courts as a result of JSOT-initiated charges laid during the previous two fiscal years. Fiscal year Proceedings commenced before the Commission 12 7 Number of respondents Quasi-criminal proceedings 8 3 Number of accused 12 3 Criminal Code proceedings 4 5 Number of accused 8 6 Search warrants executed Enforcement Timelines: Average number of months from intake to commencement of a proceeding Concluded matters before the Commission In addition to issuing sanctions following contested hearings or through conventional settlements, this year the Commission approved three no-contest settlements with large market participants, where each had self-reported the charging of excess fees for investment management services. As part of the settlements, the market participants undertook to return more than $143 million to investors, which represented the return to investors of the excess fees charged and the lost opportunity cost on these fees. These settlements represented efficient resolutions where systemic problems had been identified; namely, weak compliance systems, and market participants resolved to improve controls and correct their non-compliance conduct in a timely manner. 14

17 Concluded matters before the Commission, continued Fiscal year Number of proceedings concluded Number of respondents Sanctions include: Cease trade orders Exemptions removed Director and Officer bans 36 9 Registration restrictions Administrative penalties, disgorgement orders, settlement amounts $ 59,026,455 $ 19,187,711 Costs ordered $ 3,722,066 $ 658,993 Amounts ordered or undertaken to be returned to investors (includes no-contest settlements) $ 164,260,580 $ 147,933,167 Collections The Commission s collections rate with respect to outstanding orders increased from 19% to 38% this past fiscal year. Over $3 million was returned to harmed investors in Concluded matters before the courts Fiscal year Total number of proceedings 9 8 Total number of accused Sanctions include: Jail sentences 24.5 months 102 months 1 Conditional sentences/house arrest 42 months 12 months 2 Fines $ 296,000 $ 49,550 Restitution $ 335,634 $ 6,672, Includes Londoni Gold Corp. sentences of 96 months in jail and $6.6 million in restitution. 2 Includes sentences for privacy breaches at the Rouge Valley Hospital System and Scarborough Hospital. Adjudicative activities of the Commission Type of adjudicative proceeding Number of attendances Sitting days 1 Number of attendances Sitting days 1 Contested hearings on the merits (includes sanctions hearings and hearings in writing) Settlement hearings (includes settlement conferences) Hearings on temporary cease trade orders Motions and other interlocutory matters Applications (includes applications for review, applications relating to take-over bids and applications under section 17 (disclosure), section 144 (revocations or variations of decisions), and section 127(10) (inter-jurisdictional enforcement) of the Securities Act (Ontario)) All other matters (includes pre-hearing conferences, appearances, etc.) Total More than one sitting day can occur in one calendar day as a result of multiple proceedings. 15

18 4 through Promote financial stability effective oversight Priority What we did Why it s important Enhance oversight of the fixed income market Increasing transparency of corporate debt securities In July 2016, data on corporate debt securities trades moved from an industry-based information processor to one controlled by a regulator. NI Marketplace Operation authorizes IIROC, a non-profit, national self-regulatory organization, to collect and make transaction information for corporate debt securities available to the public. This information is published on IIROC s website two days after a trade occurs. In the first nine months as the information processor, IIROC published more than 500,000 trades covering over 1,200 bonds. This includes almost 750 bonds that would not have had transparent pricing under the previous transparency regime. This is a significant step forward in improving and enhancing transparency in these markets. Transparency of trade information facilitates price discovery, informed decision-making by market participants and the ability to assess execution quality. Review of dealers allocation practices for new debt issues In 2016, the CSA and IIROC began conducting a review of dealer debt allocation practices. The review concluded that retail and small institutional participation in the primary market for corporate debt securities practices were reasonable. This review allowed regulators to test practices currently taking place and to ensure market participants of different sizes were compliant and able to reasonably participate in debt issues. Advance systemic risk oversight and OTC derivatives regulatory regime New OTC derivatives clearing rules In January, the CSA introduced two new national instruments relating to over-the-counter (OTC) derivatives trading: NI Mandatory Central Counterparty Clearing of Derivatives requires Canadian local counterparties to clear certain OTC derivatives through a regulated central counterparty clearing agency. These include a variety of single-currency interest rate swaps and forward rate agreements. The rule came into force in April. NI Derivatives: Customer Clearing and Protection of Customer Collateral and Positions improves clearing agencies resilience to default by a clearing intermediary. It does this by protecting a local customer s positions and collateral. The rule is expected to come into force in July. Requirements for non-centrally cleared derivatives In July 2016, the CSA issued Consultation Paper Margin and Collateral Requirements for Non-Centrally Cleared Derivatives. The paper, which is modelled on the Basel Committee on Banking Supervision (BCBS) and IO framework, examines mandatory margin rules for non-centrally cleared derivatives. The paper s recommendations are harmonized with the Office of the Superintendent of Financial Institutions (OSFI) margin requirements for federally regulated financial institutions. The CSA s framework would apply to qualifying trades not otherwise covered by OSFI s guidelines. The new rules and proposals by the CSA are designed to enhance the transparency, efficiency and safety of the OTC derivatives market. The rules are aligned with international standards while considering the unique needs of the Canadian markets. The rules will allow the CSA to work with international organizations, including the FSB and IO, to identify potential systemic risk. Domestically, we have collaborative relationships with the CSA and agencies like the Bank of Canada, Federal Finance and OSFI. 16

19 Priority What we did Why it s important Establishing conduct requirements for OTC derivatives market In April, the CSA published proposed NI Derivatives: Business Conduct. The Instrument sets out fundamental obligations for OTC derivatives dealers and advisors, including requirements relating to fair dealing, conflicts of interest, know-your-client, suitability and compliance. These rules meet IO s international standards while taking into account CSA jurisdictions commitments. The comment period closes on September 1,. The proposed instrument raises the level of responsibility of OTC derivatives dealers and advisors to one that is more closely aligned with the standards held in, and generally expected of, market participants in other securities markets. Registration of derivatives market participants CSA members are drafting a proposed derivatives registration rule that will set out the principal registration requirements and exemptions for derivatives market participants, including dealers, advisors and large market participants. The proposed rule is expected to be published in This work follows the CSA s consultation paper on derivatives registration, which was published in Imposing registration requirements on derivatives market participants is intended to protect the soundness of our financial markets by ensuring that key market participants have the obligation to manage their risks. OTC compliance report We are reviewing a number of large derivatives market participants, specifically Canadian banks, to assess and test their compliance with the new OTC derivatives reporting requirements. Several non-compliance issues have been identified and the has worked with dealers to correct the issues. As we move beyond drafting rules for the OTC derivatives market into enforcing compliance, reviews provide us with new insights and data. We can use this information to determine how effective the new rules are in improving transparency and fairness in the market. Reviews can also provide early indications if further regulatory action or guidance is needed. 17

20 Implementing global standards for improved financial stability IN ACTION While many factors led to the 2008 global financial crisis, OTC derivatives played a significant role in fostering market instability. As a result, G20 countries committed to making sweeping reforms to improve the transparency, safety and efficiency of the OTC derivatives market. The FSB was established at the 2009 G20 Summit in London and began implementing reforms, a complex task that would require a substantial, collaborative effort spanning nearly a decade. The reforms have four main areas of focus: central clearing agencies, trade reporting, electronic platforms, and capital and margin requirements. Working toward key implementation deadlines of June 2018, the FSB includes senior policy makers from ministries of finance, central banks, and supervisory and regulatory authorities for the G20 countries, plus four other key financial centres Hong Kong, Singapore, Spain and Switzerland. staff have been active participants in fulfilling the reform commitments and keeping the Canadian market on track with international standards. Priority What we did Why it s important Enhance oversight of industry cyber security preparedness Guidance on cyber security In September 2016, the CSA issued Staff Notice Cyber Security. The publication provided stakeholders with an update on CSA cyber security initiatives, references for existing standards and resources and expectations for market participants. Cyber security disclosure review of issuers In January, CSA members published Multilateral Staff Notice Disclosure of cyber security risks and incidents. The Staff Notice presented a review of cyber security disclosure issues included in the most recent annual filings of Standard & Poor s (S&P)/TSX Composite Index issuers. The report noted that 61% of issuers addressed cyber security in their risk factor disclosure. While only a few issuers disclosed that they had been subject to cyber attacks in the past, many showed awareness of the potential risks, including unauthorized access to confidential information and data corruption. Cyber security roundtable In February, the CSA hosted a roundtable on cyber security with a cross-section of Canadian securities market stakeholders. Participants considered two hypothetical cyber incident scenarios that were designed to highlight opportunities for greater collaboration, communication and coordination across the stakeholders. The CSA determined that it will develop a more formal coordination process. The financial sector is one of the prime targets of cyber attacks. The risks are real and the impacts can be far-reaching. Regulators have a central role to play in assessing and promoting the readiness and cyber resilience of market participants. We are working with domestic and international partners to better protect our markets through improved collaboration and communication on cyber security issues. We expect issuers, registrants and regulated entities to take appropriate action to safeguard themselves and their clients from cyber crime. 18

21 5 and Be an innovative, accountable efficient organization Priority What we did Why it s important Support successful organization change and continuity Evidence-based regulation The and CSA rely on several different research approaches to inform our regulatory actions. These approaches include: economic and data analysis analysis of compliance reports commissioned studies literature reviews online polling focus groups public consultation This research has influenced our policies and publications on topics including behavioural insights, investor knowledge and education, best interest, embedded fees, retirement saving habits of older Canadians, cyber security, derivatives market reforms and the impact of exempt market reforms. Our rules impact investors, firms providing financial services and the vitality of Ontario s capital markets. It is critical that the s policies and publications are based on information that is as accurate and complete as possible. These research approaches also facilitate ongoing monitoring and assessment of the impact of our policy decisions. Investing in technology In June 2016, the CSA began work to create a new single integrated system to replace the CSA National Systems, which include investmentrelated databases such as the Cease-Trade Order Database, National Registration Database, National Registration Search and Disciplined List, System for Electronic Document Analysis and Retrieval and the System for Electronic Disclosure by Insiders. CGI Information Systems and Management Consultants Inc. and FosterMoore have been contracted to develop, launch and maintain the new system. It is expected to be delivered in stages throughout 2018 and The CSA is also planning to invest in a new system to facilitate the efficient identification and analysis of Canadian capital market misconduct and improve insight into the Canadian market structure. The new system, called the Market Analysis Program, will initially focus on equity markets and listed derivatives. Future phases may expand the program into other asset classes once the initial work is in production. Given the rapid advances in technology in the financial sector, we must ensure the systems we use are as robust and secure as possible. This is especially important given the private and sensitive nature of the documents filed through the CSA s databases. The new system is expected to make filing easier for companies and individuals, and will improve the quality of data we use in our analysis and evidence-based regulation. Other technological investments that improve our ability to monitor and analyze market activity allow us to detect compliance issues and misconduct faster, and as a result, better protect investors. 19

22 On the pulse of investor and market participant issues IN ACTION The s Inquiries and Contact Centre includes a staff of experts who handle a wide variety of questions, complaints and comments from investors and market participants. In the past year, the team responded to 16,088 inquiries and complaints, an increase of 12 per cent from the previous year. Eighty-six per cent of inquiries and complaints were addressed on the same day they were received. Along with assisting the public, this team provides a service to other branches by flagging early trends in inquiries and complaints. For example, a significant uptick in complaints about binary options helped inform swift regulatory action on the matter. Top 3 INVESTOR inquiries 21% Frauds and scams 17% Issuer obligations 12% Registration checks Top 3 market participant inquiries 30% Registration requirements 18% Issuer obligations 11% Forms and fees Priority What we did Why it s important Investing in our people This year we introduced a Learning Portal that provides a one-stop shop for employees to discover and access the variety of opportunities provided by the organization, including the Academy, professional and leadership training programs and the Administrative Professionals development program. In addition, the is committed to supporting the health, safety and wellness of its employees and offers a comprehensive employee wellness program focused on providing employees with tools and resources in the areas of: physical health and nutrition mental health retirement and financial planning career, time and transition management conflict management One way this was demonstrated was through the s sponsorship of 15 teams to participate in the Global Corporate Challenge, an international walking competition that supports health and well-being goals. The earned first place in its industry ranking in Canada by walking a combined 144,512,942 steps or 92,488 km. We are committed to supporting the professional growth and development of our staff. This includes investing in programs that support the overall well-being of employees. Fostering inclusivity and diversity In June 2016, the held its first annual Pride celebration where it announced the creation of an Pride Employee Group. The Commission and staff continue to reflect the s values of diversity through its hiring and appointments. This year, 47% of our Commission and 45% of our Senior Management are women. At the, we believe that inclusivity and diversity of perspective are strengths and contribute to wellconsidered decisions. 20

23 Governance George Boileau, Rampart, 1997, Toronto, The Ontario Securities Commission. 21

24 Lead Director s letter the Commission has strongly supported staff in moving forward on the consideration of a best interest standard, as well as specific amendments to requirements relating to suitability, know-your-client, know-your-product and conflicts of interest. On behalf of my fellow Commissioners, I would like to express our appreciation for the contributions of the Commissioners whose terms ended in this past year: Mary Condon, Sarah Kavanagh, Edward Kerwin and Alan Lenczner. We would also like to thank Christopher Portner for his dedicated service as a Commissioner and as our Lead Director for the past three years. As a result of these Commissioners completing their terms of office, we welcomed four new Commissioners in recent months: Philip Anisman, Frances Kordyback, Robert Hutchison and Mark Sandler. As Commissioners, we carry out several important and independent roles. First, we act as the Board of Directors of the Crown corporation, providing oversight of the management and effectiveness of all aspects of the business of the. In addition, we are responsible for the regulation of Ontario s capital markets. We do this by engaging in the development of, and approving, regulatory rules and policies. We also perform an adjudicative function by conducting hearings of enforcement matters. We also support the efforts of the Investor Office in helping to educate investors so that they can make better informed decisions. Similarly, another area of focus has been the CRM2 initiative, which provides improved disclosure in client account statements so that investors have a clearer understanding of how their investments have performed, the costs they are paying and how those costs ultimately affect the performance of their investments. The Commission has demonstrated leadership in establishing policies for best practices in gender diversity for public issuers. As a Board, we apply best practices in our own recruitment policies. As a result, for the past several years, we have had approximately equal representation of men and women on the Commission. As we look forward, we are also committed to ensuring that we actively seek out candidates who represent the diversity of the people of Ontario in all aspects: geographic, gender, ethnic and cultural. In closing, we would like to acknowledge staff, the Executive Management Team, and in particular, Executive Director Leslie Byberg, for their achievements over the past year. We would also like to express our sincere thanks and appreciation to Maureen Jensen for her leadership and commitment to the success of this organization. Maureen has been a tireless champion of the and her vision has helped build an organization that is highly regarded in the financial and regulatory communities, both in Canada and around the world. In the past year, the Commissioners have supported and advanced several key initiatives, which I would like to highlight. One of the most important aspects of our mandate is the protection of investors in Ontario. As such, we believe that a best interest standard is needed as a guiding principle so that investors receive advice from industry professionals who are required to put the investor s interest first. In line with similar developments internationally, AnneMarie Ryan Lead Director Ontario Securities Commission 22

25 The Commission Philip Anisman Peter W. Currie Garnet W. Fenn William J. Furlong Robert P. Hutchison Maureen Jensen Chair and CEO Frances Kordyback Monica Kowal Vice-Chair Deborah Leckman Janet Leiper Timothy Moseley Judith N. Robertson AnneMarie Ryan Lead Director Mark J. Sandler D. Grant Vingoe Vice-Chair 23

26 Governance Composition of the Board and Senior Management The is a self-funded Crown corporation, accountable to the Ontario Minister of Finance. The operates under the direction of the Commission, which has two related but independent roles. It serves as the board of directors of the Crown corporation, and it performs a regulatory function, which includes making rules and policies, and adjudicating administrative proceedings. Our Board of Directors the Commission consists of nine to 16 members, called Commissioners. The Chair and Vice-Chairs are full-time members, and the other members are part-time. Each member is appointed for a fixed term by the Ontario Lieutenant Governor in Council, and appointments are made according to the procedures of the Public Appointments Secretariat of the Government of Ontario. The Commission may recommend candidates for appointment. You can find more information about our governance practices in our annual Statement of Governance Practices, which is available on the s website at We are committed to diversity and inclusion on the Commission. In our searches for new Commissioners, we seek appointees who reflect the diversity of the people of Ontario and deliver services and decisions in a non-partisan, professional, ethical and competent manner with a commitment to the principles and values of public service. As a regulatory body that sets standards for the governance of public companies, the Commission has adopted best practices in its own governance. This includes the policies outlined in National Instrument Disclosure of Corporate Governance Practices relating to women on boards and in executive officer positions, which were implemented in December 2014 by the and other CSA members. Representation of women on the Board and in Senior Management The Board actively seeks out women in the recruitment and nomination process. Our objective is to have approximately equal representation of male and female members on the Board. As an organization, we are committed to the representation of women in senior management and ensuring that women are actively sought out in the recruitment process for senior management positions. The objective is to maintain an approximately equal representation of women and men in our senior management positions. However, achieving this objective at any point in time is balanced with the need to hire highly qualified and experienced individuals who can carry out the requirements of the specific role and ensure the effective delivery of the mandate Female Male Female Male (#) (%) (#) (%) (#) (%) (#) (%) Board of Directors (Commission) Executive Committee (Chair, Vice-Chairs, Executive Director) Senior Management (including Executive Committee)

27 Terms of Members of the Commission (April 1, ) Appointed Current term ends Philip Anisman November 2016 November 2018 Peter W. Currie May 2016 May 2018 Garnet W. Fenn July 2015 July William J. Furlong January 2015 January 2019 Robert P. Hutchison February February 2019 Maureen Jensen (Chair) February 2016 February 2018 Frances Kordyback November 2016 November 2018 Monica Kowal (Vice-Chair) July 2014 July 2018 Deborah Leckman February 2013 January 2019 Janet Leiper January 2015 January 2019 Timothy Moseley January 2015 January 2019 Judith N. Robertson June 2011 May AnneMarie Ryan (Lead Director) February 2013 January 2019 Mark J. Sandler February February 2019 D. Grant Vingoe (Vice-Chair) August 2015 August More information about the Members of the Commission is available at 25

28 Board and Commission Committees (April 4, ) Audit and Finance Committee William J. Furlong (Chair) Peter W. Currie Garnet W. Fenn Robert P. Hutchison Frances Kordyback Deborah Leckman Governance and Nominating Committee Janet Leiper (Chair) Philip Anisman William J. Furlong Frances Kordyback Maureen Jensen (Ex officio member) Human Resources and Compensation Committee Judith N. Robertson (Chair) Peter W. Currie Garnet W. Fenn Deborah Leckman Timothy Moseley Adjudicative Committee 1 Timothy Moseley (Chair) Philip Anisman Monica Kowal Janet Leiper Judith N. Robertson Mark J. Sandler D. Grant Vingoe Grace Knakowski (Ex officio member) 1 The Adjudicative Committee is a standing policy committee of the Commission. The mandates of the Committees and of the Lead Director are available at 26

29 Meeting attendance (April 1, 2016 to March 31, ) During the year, a total of 46 meetings of the Commission, Board, and Board Committees were held. The attendance of each Member at these meetings is shown in the table below. Type of meeting 1 Member Commission 2 Board Audit and Finance Committee Governance and Nominating Committee Human Resources and Compensation Committee Philip Anisman 3 7/7 5/5 1/1 Mary G. Condon 4 4/4 1/1 0/1 Peter W. Currie 3 13/13 5/5 4/4 5/5 Garnet W. Fenn 16/17 8/8 6/8 7/8 William J. Furlong 16/17 8/8 8/8 3/3 Maureen Jensen 16/17 8/8 Robert P. Hutchison 3 3/3 3/3 Sarah B. Kavanagh 4 3/4 1/1 2/3 1/1 Edward P. Kerwin 4 12/12 4/4 4/4 Frances Kordyback 3 7/7 5/5 2/2 1/1 Monica Kowal 17/17 8/8 Deborah Leckman 17/17 8/8 8/8 9/9 Janet Leiper 17/17 8/8 4/4 Alan J. Lenczner 4 9/14 3/5 5/6 Timothy Moseley 17/17 8/8 9/9 Christopher Portner 4 12/12 4/4 3/4 5 1/2 5 3/4 5 Judith N. Robertson 17/17 8/8 9/9 AnneMarie Ryan 6 17/17 8/8 5/5 3/3 2/2 5 1/1 5 4/5 5 Mark J. Sandler 3 3/3 3/3 D. Grant Vingoe 17/17 8/8 Average by type of meeting 96% 98% 91% 93% 98% 1 Includes both regular and special meetings. 2 Policy and rule-making matters. 3 Member appointed to the Commission during the year. 4 Member s term of appointment ended during the year. 5 Lead Director may attend the meetings of the Board committees as a non-voting member. 6 Elected Lead Director in November 2016, replacing Commissioner Portner. 27

30 Advisory Committees 28